Question – Motor home is our home and business – what can we claim?
I am planning to retire from teaching in two years at the age of 55. I do not intend to take any money from my pension at that time. My wife will also retire from her job as a foster carer. Currently, we let out property and when we retire will also rent out our current family home. We plan to buy a mobile home and travel around the UK, Europe and beyond for the foreseeable future. This means that we will have no fixed abode in the UK.
Our motor home will also be our place of business since we intend to maintain a blog and produce videos about our travels with a view to earning income from these activities. We expect to be away from the UK for six to eight months of the year before returning to see our family.
I understand that we will owe tax on the rental income minus allowed deductions. We will also be earning money from the blog, but how does this work? Also, what expenses can we claim for the vehicle. which will be our home and our business.
Query 18,973– Blogger.
Answer – Motor home is our home and business – what can we claim?
It would be beneficial to review the badges of trade first because the travel articles and videos may be seen as a hobby rather than a trade because this is not similar to the roles the couple have previously had.
It may be beneficial to establish whether the individuals are ‘itinerant workers’ because this can be relevant for some expenses. HMRC has no definition of an itinerant worker but, based on definitions found online, it would be an individual who travels from place to place for work, with no fixed home. Based on this, I would be tempted to state that the travel blogger may be an itinerant worker. The travel blogger travels from place to place to write articles and make videos and therefore travels from place to place to work. HMRC is inclined to allow travel, subsistence and accommodation expenses if a person is an itinerant worker and the expenses are reasonable.
It is important also to consider the purpose and effect of the expenses incurred and whether the costs are ‘incidental’ or not. Here, HMRC would look at the original intention when the expense was incurred.
Duality of purpose is a keen area for HMRC and expenses can often be denied. Food and drink may be disallowed on the ground that the taxpayer must eat to live. On accommodation, any domestic living would be disallowed.
Here, I would imagine that HMRC is considering the fact that the couple have retired, sold their main residence in the UK and are travelling around the world in their motor home, enjoying their ‘golden years’. Any time spent writing articles or making videos are merely incidental to their desire to travel. Details would need to be considered to establish what the drive for the travelling is and the reasons for the chosen locations.
The additional point to note is that the individual is giving up his main residence. Could HMRC argue that the motor home is their home, in which case accommodation costs and ‘home’to work travel would be disallowed. Is there a dear distinction between home and work?
Although I would be inclined to treat the individuals as itinerant workers due to the nature of their trade and requirements, because they have given up their main residence and taken residence in the motor home it will be very difficult to justify and claim a proportion of the travel and subsistence expenses.
The individuals could claim some expenses that may be incurred, such as a camera or laptop (apportioned to take account of private use). They could also claim use of home as office for the motor home. This would cover costs such as utilities, gas and electricity (if any). The individuals could use three ways to claim such expenses: calculate themselves the reasonable proportion of costs; use the standard £4 a week; or use the flat rate deduction and calculate the costs depending on hours worked at home.The first choice will require the individuals to maintain adequate records.
It would be beneficial to establish UK residency status because this will affect the business profits that would be subject to UK income tax.
For help on a personal tax matter, speak directly to Reshma Johar at firstname.lastname@example.org.